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GM’s trucks,new vehicles sales to see increase in October
Though this October month still not over, and the U.S automakers’ official October sales result won’t be reported until next Tuesday, GM officials said Wednesday that they expect first monthly sales increase after 21 months drop.
Susan Docherty, GM’s new vice president of U.S. sales, touted the uptick but noted that a lot more work lies ahead for the company, whose U.S. sales are still down 36.3% through September. “We’re here to talk about progress,” she said.
GM Chief Executive Officer Fritz Henderson, visiting Washington, D.C., said that recently enacted pay changes for executives were fair, and he didn’t argue with ex-auto task force chief Steve Rattner’s criticisms of pre-bankruptcy GM’s management as “stunningly poor.”
“There was a lot of truth in it,” he told the Associated Press. “We’ve got to change.”
GM expected to trump its rivals
General Motors Co. is expected to be the big winner when October sales results are announced Tuesday.
“We expect GM to largely outperform the overall market and post its strongest market share of 2009,” Brian Johnson, industry analyst with Barclays Capital, said in a note to investors Wednesday.
He estimated industry sales to be down 3%, compared with last October.
“We expect Chrysler to post another very steep” year-over-year “sales decline, and Ford, Toyota and Honda to also underperform somewhat,” Johnson added.
Jeff Schuster, J.D. Power and Associates’ executive director of global forecasting, agreed that GM is looking strong for the month.
“They’re doing well in the pickup market. Pickup trucks are up substantially this month, and part of that is due to some programs GM is running,” he said.
GM officials credited their sales increases in part to the launch of new vehicles — such as the Chevrolet Equinox midsize SUV — and to a strong month of truck sales.
Susan Docherty, GM’s new vice president of U.S. sales, said GMC Yukon SUV sales are expected to be up 118%.
She acknowledged that GM’s use of incentives spending for vehicle sales is “one of the highest in the industry,” at about $3,900 to $4,000 per vehicle.
GM’s overall inventory is heavy on 2009 model-year vehicles and could help explain why GM did better against competitors whose inventories are more skewed to 2010 models, analysts said.
“For your average consumer, they probably think it’s October, it’s the end of the model year, I’m going to get a better deal on that, and I think it does a lot to the consumer psychology,” said Jessica Caldwell, a senior analyst with Edmunds.com.
About 65% of GM’s inventory is 2009 model-year vehicles, Docherty said. “Some of our competitors are already sixty-, seventy-, eighty percent 2010 models,” she said.
Docherty added that the heavy mix of 2009 vehicles was part of GM’s “conscious effort” to continue building 2009 model full-size pickups and SUVs later into the calendar years than competitors.
“It gives you a price advantage. The ‘010s tend to have a price increase on them. So you’re in a better position to have a good closeout,” Mike DiGiovanni, GM’s executive director of global market and industry analysis, said.
“Our market share in trucks, full-size pickups, is over 40%, one of our strongest months ever,” he added.
DiGiovanni said that about 95% of the sales for the month are coming from the company’s four core U.S. brands — Chevrolet, Buick, GMC and Cadillac. A year ago, those brands comprised about 85% of the company’s sales.
GM is in the process of winding down Pontiac and Saturn and selling off Hummer and Saab after emerging from bankruptcy in July.
“We’re clearly getting behind us the brands we’re phasing out,” he said.
In a letter to President Barack Obama, the lawmakers cite recent comments from former auto task force chief Steven Rattner that the government’s stake in GM and its loans to the automaker are worth about $25 billion.
The U.S. government has given GM a total of $49 billion, but Rattner and other officials have maintained that the $19 billion sent to GM before its bankruptcy in May should be written off for keeping the automaker afloat this year.
“How much should taxpayers expect to lose from the ‘Bridge Loan to Nowhere?’ the Republicans write.
The Republicans called on the administration to release detailed financial reports on GM comparable to public companies, as well as the minutes of task force meetings. GM officials have said they expected to release financial results in early November, and the Congressional Oversight Panel has probed the loans in recent months.
“Despite this administration’s pledge of transparency, the terms of the ‘Bridge Loan to Nowhere’ remain secret,” the lawmakers said. “Taxpayers are in the dark on the basic details of the taxpayers’ money at GM.”
The criticism against GM came on the same day GM CEO Fritz Henderson was in Washington to visit with officials on the automaker’s progress.
He met with Transportation Secretary Ray LaHood and congressional leaders.
Rattner’s comments, published in a first-person account by Fortune last week, drew questions from reporters. In the piece, Rattner called GM’s management prior to the bankruptcy “stunningly poor.”
GM CEO Fritz Henderson told the Associated Press there was a lot of truth in the accusation. “You’ve got to take that to heart,” he said. “You’ve got to internalize it and say, ‘How do we change?’ “





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